Households Remain Resilient,
but for How Much Longer?
Index of Consumer Spending
The Index of Consumer Spending averaged 89.5 points in March, a 3.3-point decline from February (the week of April 10, 2022 = 100).
- After falling to 89.4 points during the week of February 26, the Index of Consumer Spending (ICS) recovered by 0.9 points in the following two weeks, reaching 90.3 points during the week of March 12. However, the index slipped 1.6 points in the second half of March, falling to 88.7 points by the week of March 26. Data on the ICS are available from the week of April 10, 2022, to the week of March 26, 2023.
- The ICS fell to a record low of 88.7 points in the final week of March. What’s more, growth in consumer spending has decelerated below all measures of inflation. Our index tracks growth in nominal spending over time, but if the spending data were adjusted for inflation, real growth could be negative—this would imply that Canadians are spending less year over year.
- According to our Index of Consumer Confidence (ICC), households’ outlooks on current and future finances improved in March. This explains why consumers spent more (on average) in March than they did in February. Despite this increase in positive sentiment, however, consumer confidence levels were well below those of March 2022.
- Inflation is heading in the right direction. The national inflation rate fell to 4.3 per cent (year over year) in March. Food prices are still a concern—grocery bills are taking up a larger share of household budgets. Even though consumers spent more (on average) month over month, year-over-year growth in consumer spending has slowed. This shows how elevated prices have affected households over the last several months.
- Canadians have proven to be resilient during this period of high inflation. Spending on services remains robust thanks to the tight labour market. Employment levels grew by 35,000 jobs in March, while the national unemployment rate held steady at 5.0 per cent. Growth in consumer spending would have been even weaker had the labour markets not performed well in the first quarter of 2023.
Alberta
The index averaged 91.7 points in March, a decrease of 3.6 points from February.
Alberta’s index sank in the first two weeks of March, falling to a record low of 90.7 points in the week of March 12. The ICS recorded a slight recovery in the week of March 19, rising to 92.2 points. However, the index declined by 0.4 points in the final week of March, settling at 91.8 points. In the end, the ICS averaged lower in March than February, implying that growth in consumer spending has decelerated further. Still, on a month-over-month basis, consumer spending improved. We found that Albertans spent more (on average) throughout March than in February, thanks to a solid labour market performance. However, there is uncertainty around oil prices this year. Consumer confidence (and by extension, consumer spending) may swing in the opposite direction if there is a sudden shock to oil prices.
Atlantic Provinces
The index averaged 100.5 points in March, a slight drop of 0.2 points from February.
After falling to 98.0 points in the week of February 26, the region’s index rose by 4.8 points to reach 102.8 in the week of March 5. The ICS then declined 3.7 points in the following two weeks to 99.1 points. However, the index recovered 1.4 points to settle at 100.5 points during the week of March 26. Ultimately, the ICS trended downward in March, but overall spending averaged higher than in February. Consumer confidence improved, which explains the higher spending. But slower growth in spending indicates that inflation has taken a toll on households.
British Columbia
The index fell to 88.9 points in March, averaging 1.8 points lower than in February.
After falling to 87.7 points in the week of February 26, British Columbia’s index rose for two consecutive weeks—reaching 89.6 points during the week of March 12. In the second half of the month, the index declined by 1.1 points, offsetting some of the gains made in the first half of March. Ultimately, the index averaged slightly lower in March compared with February. Inflation fell to 4.7 per cent in March, and the level of employment remained virtually unchanged. British Columbians spent more (on average) than in February, but the ICS has trended downward. Consumer confidence improved this month, which explains why spending increased; however, decelerated growth in spending (year over year) indicates that inflation and higher interest rates have taken a toll on households.
Ontario
The index averaged 84.7 points in March, decreasing 3.9 points from February.
After falling to 84.8 points in the week of February 26, Ontario’s index jumped 1.5 points in the two weeks that followed, reaching 86.3 points in the week of March 12. However, the index recorded steady declines in the second half of the month, falling to a record low of 83.2 points in the final week of March. Year-over-year growth in consumer spending trended downward in March, but on average, Ontarians spent more in March than in February. As well, consumer confidence moderated slightly, and employment levels grew by 21,400 jobs—consumer spending would have been weaker had the labour market not been tight. Still, the decline in the ICS suggests that Ontarians are continuing to adjust their budgets to cope with inflation.
Quebec
The index fell to 90.2 points in March, averaging 3.3 points lower than in February.
Quebec’s index rose in the first half of the month, reaching 91.9 points in the week of March 12. This trend was short-lived, however, as the index declined in the second half of the month, settling at 89.0 points in the week of March 26. Ultimately, year-over-year growth in consumer spending trended downward in March. Quebecers felt less confident about their future finances, and employment levels fell by around 1,600 jobs. Further, inflation dipped to 4.7 per cent in March, but the CPI increased from the previous month. Despite all this, consumer spending averaged higher in March than it did in February. Consumers have been resilient thanks to savings accumulated over the last few years. However, the decline in the ICS indicates that growth in consumer spending has decelerated further. Inflation and higher interest rates have affected consumer behaviour—many households have held off on purchasing big-ticket items, which also explains the drop in the ICS.
Manitoba–Saskatchewan
The index averaged 103.3 points in March.
The region’s index fluctuated in the first half of March but recorded modest gains throughout the second half. Ultimately, the index averaged lower in March than in February (106.4 points). One reason for this is that consumer confidence in this region is far lower than it was in March 2022. What’s more, negative sentiment toward current finances is higher now than it was a year ago—which explains the decline in the ICS. On a positive note, the region’s unemployment rate averaged 4.7 per cent in March and remains below the national average. Tight labour market conditions explain why consumer spending trended upward in the first quarter of 2023.
Territories
The index averaged 99.8 points in March, dropping 3.7 points from February.
The region’s index jumped to 101.7 points in the week of March 5 but then steadily declined throughout the rest of the month. The index slipped 3.7 points between the weeks of March 5 and March 26 to settle at 98.0 points. Consumers in this region are faced with higher-than-average prices, especially at the gas pump—in Whitehorse and Yellowknife, gasoline prices averaged $1.69 and $1.62 per litre, respectively. In addition, the region’s unemployment rate averaged 6.7 per cent—0.4 percentage points higher than in February. Persistent inflation, higher interest rates, and dull labour market performances have impacted consumer behaviour, explaining why the ICS trended downward over the last several weeks.
Consumer spending averaged higher in March than in February, but year- over-year growth in spending has slowed.
Powered by Moneris Data Services
Canada’s Gross Domestic Product is largely made up of consumption. One way to gauge how the economy is performing is to look at how much Canadians are spending. Yet across the Canadian economic landscape, there is a lack of readily available consumer spending data. With that in mind, we created the Index of Consumer Spending for provinces and for Canada as a whole. This unique Index is powered by exclusive consumer transaction data provided by Moneris Data Services. Moneris is Canada’s number one payment processor with over 3.5 billion transactions spanning more than 325,000 merchant locations. This index is intended to inform senior policy makers how the country and the provinces are doing. Updates on this index will be released monthly.
Disclaimer: Forecasts and research often involve numerous assumptions and data sources and are subject to inherent risks and uncertainties. This information is not intended as specific investment, accounting, legal, or tax advice.